Tuesday, October 14, 2014

The #BucksForest Plan for a Healthier NBA Schedule (with Math!!)

The author has been critical of the NBA since Adam Silver became commissioner.  The new TV contract looks like a recipe for overexposure, Donald Sterling was branded a racist unfairly and Silver has yet to make a compelling case to the Milwaukee public on why a new arena is necessary.

Today brought some good news: the NBA is getting concerned about the health of its players.  For as long as the league has had an eighty-two game season, players and coaches have complained that there are too many games.  The NBA has yet to float the idea of shortening the schedule, but they are trying out a forty-four minute game.  That's good!  More healthy players and fewer burned out coaches is good for everyone.

As usual, the author thinks that this change could be pushed further.  Specifically, that the NBA schedule could be shorter without losing significant revenue.

Here is the #BucksForest idea for a healthier NBA schedule:

-58 game schedule

-Home-and-home vs. each team

-Best 14 teams make the playoffs

-Bottom 16 teams enter Bill Simmons's "Entertaining as Hell Tournament" for the last two playoff spots

-Season starts in early October; three to four weeks earlier

-Two games per week, either Thursday/Saturday or Friday/Sunday

-Either two home games or two road games in a given week (no home/road splits)

-No games Monday through Wednesday

-No games the week of the All-Star game

-Season ends in mid-April, same as now

-Eliminate divisions and conferences

How is that possible, asks the reader?  How can the NBA go from the current 82 game schedule to the #BucksForest proposed 58 game schedule ?  Watch and learn, he says:

A 58 game schedule would not affect the current or upcoming national TV contract.  58 games per team would be more than enough games to fill the League's commitments to ABC, ESPN, TNT and NBA TV.  In fact, the goal would be to allow the 58 game season to catalyze ratings growth.  The national TV contract that would start in 2025 would be closer to the NFL's rather than MLB's, as it is now.

A 58 game schedule would affect local TV contracts and gate revenue.  NBA teams average between $500,000 (our beloved, downtrodden Bucks) and $3,000,000 (the similarly downtrodden Knicks) per game at the gate.  A 58 game schedule would mean that between $6 million and $36 million per team would be lost, assuming that ticket prices and attendance stay the same (which they wouldn't, but we're trying to have conservative projections here).  Local TV contracts could also see a monetary loss, but it's unclear if it would be on a direct ratio of 58 to 82 games, like gate revenue would.  Current local TV contracts for NBA teams may have provisions built in allowing the team to have a shorter season.  Even if teams don't have those provisions, local sports cable channels (where almost all local telecasts originate nowadays) would likely continue to be willing to pay huge amounts with the guarantee of more weekend games.  (Television ad rates are highest on Thursdays and Sundays, and both would be protected under the #BucksForest proposed schedule.)

Those are the negatives of the shortened season: $6 million to $36 million in lost gate revenue per team (again, assuming that ticket prices stay the same and attendance stays flat) and a possible drop in local TV revenues.

Now, for the positives.

Gate revenue per game would almost assuredly climb with a 58 game season.  Many season ticket holders budget based on the full season price.  When I sent the Bucks my electronic signature last spring, the number on my mind is $2,756 per season, not $33 per ticket.  If the Bucks charged, say, $40 per ticket, I would feel like I'm getting a deal at $2,460 per season.  For people who only attend a few games per season, there would be less overall ticket inventory.  Less supply usually means higher prices to match demand.

I project that gate revenue would climb around 10-20% per game if the NBA went to a 58 game season.  That would mean a loss of $3 million to $27 million per team instead of $6 million to $36 million per team.  So, still a loss, but less of one.  (And my honest opinion is that gate revenue would climb more than 20% per game, but I want to keep projections more in line with mainstream thinking here.)

An increase in merchandise sales is another potential positive, and it is huge.  Merchandise sales -- especially jersey sales -- tend to be driven by the passionate embrace of the athlete or team.  It's the reason why Washington Redskins jersey sales have fallen so dramatically since RGIII's injury.  The player went from superstar to marginally employable and the team went from a division champion to one of the worst in the NFL.  The NBA offers more proof of this phenomenon.  Superstar players tend to grab a higher percentage of non-local jersey sales in the NBA than in other sports.  For example, LeBron sold Heat jerseys all over the place, but Russell Wilson basically just sells to Pacific Northwest residents and expats.

A 58 game schedule is designed to make fans more passionate by making following the team easier.  Monday through Wednesday would be the time to talk Bucks.  Fans wouldn't have to check the daily schedule to see if there was a game on.  Anticipation would be built for the weekend.  With increased anticipation comes increased passion, which would lead to more merchandise being sold.

The more structured nature of a 58 game schedule would have other benefits as well.  Hardcore fans would know that Thursdays are for TNT, Fridays are for ESPN, Saturdays are for NBA TV and Sundays are for ABC.  That regular scheduling would likely lead to more hardcore fans, higher ratings and, ultimately a larger national TV contract in 2025.  And that's the big argument for a 58 game season.  The League could lose up to $300 million or so in combined local TV and gate revenue initially, but the boost it could give to television viewership could see the national TV contract make up for it and then some.  The NFL receives $1.9 billion/year for 16 exclusive regular season game windows on cable/satellite television.  The NBA is getting about the same amount or less (and probably significantly less, as the per-year average for regular season + Playoffs + NBA TV + streaming is $2.66 billion) for 164 exclusive regular season game windows on cable/satellite.  So, an NBA regular season game is worth less than 10% the value of an NFL game to cable/satellite channels.  If a 58 game schedule would deliver a bump to even just 15% of the value of an NFL regular season game, it would mean about a $900 million per season bump; easily making up for $300 million in lost local TV and gate revenue.

And that's the ultimate #BucksForest argument for a 58 game NBA season: $900 million is more than $300 million.  Or, more broadly, the number one thing the NBA can do to grow the League is to increase how much regular season games mean to national television viewers.

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